Large Cap Core (formerly known as Enhanced Large Cap)
as of June 30, 2014
Fund Commentary
The S&P 500® Index continued to reflect a strengthening economy, advancing for the sixth-consecutive quarter and reaching record highs. Investors generally looked past the decline (-2.9%) in first-quarter economic output and pushed the equity markets forward. The U.S. Federal Reserve continued tapering quantitative easing (QE), with the program likely concluding by year end. The U.S. economy continued to rebound with strong earnings growth, increasing employment and expanding manufacturing. Inflation remained modest, but investors were concerned about future inflation. Europe’s economy continued to slowly recover, while the European Central Bank cut rates again to boost economic growth. Japan raised its consumption tax by 60% at the beginning of the quarter, causing further global growth concerns.

The Large Cap Core Fund posted a total return of 4.29% for the quarter, compared with 5.23% for the Fund’s benchmark, the S&P 500® Index. The Fund’s underperformance primarily was due to stock selection in the consumer discretionary, financials and energy sectors. Stock selection within the industrials and materials sectors added to performance.

Investors generally revised downward their economic growth projections for the first half of 2014, taking the first quarter’s weather disruptions into account. We believe stronger spending and manufacturing should create a favorable environment for stocks during the rest of the year. In addition, it’s unlikely any major legislation will pass before November’s mid-term elections. Overall, investors remain concerned about slowdowns in the larger emerging markets, particularly China, and the impact of higher taxes in 2014.

We believe the outlook for risk-taking will continue to improve on better economic data. We believe the Fund is well-positioned as investors move beyond the broad economic data and refocus on company fundamentals.
Investor Profile

If you're seeking a low cost, disciplined approach to investing in equities, this fund may be appropriate for you. It seeks long term growth of capital and dividend income and invests primarily in a broadly diversified portfolio of established, large-cap companies. The Fund is intended for use as a core equity investment.

Philosophy
  • Use a multi-factor proprietary quantitative stock selection model with the goal of providing additional total return versus the S&P 500® Index.
  • Create a portfolio with risk, style, capitalization and characteristics similar to the S&P 500® Index while potentially providing excess returns by overweighting or underweighting stocks that have the potential to achieve the Fund's objective.
  • Sell securities when they are no longer attractive based upon evaluation criteria, such as valuation, price momentum and earnings quality.
 
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Not FDIC insured | May lose value | No bank guarantee

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